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Freese, Inc., is in the process of preparing the fourth quarter budget for 2016, and the following data have been assembled: The company sells a

Freese, Inc., is in the process of preparing the fourth quarter budget for 2016, and the following data have been assembled:

The company sells a single product at a price of $68 per unit. The estimated sales volume for the next six months is as follows:

September

13,000

units

October

12,000

units

November

14,000

units

December

20,000

units

January

9,000

units

February

10,000

units

All sales are on account. The company's collection experience has been that 30% of a month's sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $601,120 on September 30, 2016.

Management's policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month's budgeted sales. The finished goods inventory on September 30, 2016, is expected to be 3,600 units.

To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory is expected to be 25,200 pounds on September 30, 2016.

The cost per pound of raw material is $4, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $75,960 on September 30, 2016.

Required: a. Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2016.

October

November

December

Total

Expected sales in units

Selling price per unit

Total sales

b. Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2016.

Cash collections from:

October

November

December

Total

September sales

October sales

November sales

December sales

Total cash collections

$0

$0

$0

$0

c. Prepare a production budget in units, by month and in total, for the fourth quarter of 2016.

October

November

December

Total

Beginning inventory of finished goods

Units to be produced

Goods available for sale

0

0

0

0

Desired ending inventory of finished goods

Quantity of goods sold

0

0

0

0

d. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2016.

October

November

December

Total

Beginning inventory of raw materials

Purchases of raw materials

Raw materials available for use

0

0

0

0

Desired ending inventory of raw materials

Quantity of raw materials to be used in production

0

0

0

0

e. Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter of 2016. (Do not round intermediate calculations.)

Cash payments for:

October

November

December

Total

September purchases

October purchases

November purchases

December purchases

Total cash payments

$0

$0

$0

$0

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